News > Technology
Microsoft set for appeal
February 23, 2001: 4:13 p.m. ET

Company will argue it acted lawfully, judge was biased, remedy was extreme
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NEW YORK (CNNfn) - Microsoft Corp. attorneys go to federal appeals court next week looking to kick the legs out from under trial court findings that it broke the nation's antitrust laws and should be split in two.

A seven-judge panel is due to hear two days of oral arguments by company and government lawyers, starting on Monday, on the software giant's contention that its behavior was lawful, the trial judge was biased and his remedy extreme.

Many legal analysts believe the U.S. Court of Appeals, which ruled for Microsoft in a related matter in 1998, represents the best chance for the world's largest software company to overturn or substantially weaken the sweeping ruling of U.S. District Court Judge Thomas Penfield Jackson.

A weakening of the case first brought by the U.S. Justice Department and state attorneys general in May 1998 might lead antitrust enforcers in the new Bush administration to seek a settlement.

"They [Microsoft] would be more than happy to knock some of the case out and then try to settle with a more sympathetic administration," said Steve Houck, an attorney who represented the New York attorney general's office in the case before leaving for the private law firm Reboul, MacMurray. "I think that's exactly what the game plan is."

Antitrust lawyer Dan Wall told CNNfn the hearing will not be timid affair. (319K WAV or 319K AIFF)

Officials from Microsoft declined to comment on the appeal. A Justice Department spokeswoman would only say the department looked forward to presenting its case.

New team in town

But the company will likely have an easier time dealing with the Bush administration's nominee to head the antitrust division, Washington antitrust lawyer Charles James, than his predecessor.

James stressed in a television interview last year that consumers had benefited from the ubiquity of Microsoft's Windows software platform.

Jackson found that Microsoft holds monopoly power in the market for personal computer operating systems with its Windows product and illegally used that power, including integrating its Web browser into Windows to combat Netscape's browser.

On June 7, Jackson ordered that the company be broken up to prevent future antitrust violations, and set other remedies, all of which he suspended pending appeal.

The appeals court hearings will begin with the judges questioning both sides on whether Microsoft sought to illegally maintain its monopoly over PC operating systems and whether it broke the law by tying its Internet Explorer Web browser to the Windows operating system.

On Tuesday lawyers will debate the government's charge that Microsoft used its dominant position to attempt to monopolize the Internet browser market as well, and whether the court should uphold Jackson's decision to split the company in two.

Finally, the judges will hear arguments over Microsoft's assertion that Jackson was biased against the company and conducted the lower-court trial unfairly.

Legal experts said Microsoft has a good chance of convincing the appeals judges to reverse Jackson's conclusion that the Internet browser was illegally tied into Windows, and the attempted monopolization claim. Two of the appeals judges overruled Jackson once before after he ordered the company separate the browser from Windows.

The company will make a strong case that Jackson erred procedurally, according to Robert Litan, a former Justice Department official now with the Brookings Institution. He said the judge should have held hearings to determine a remedy in the case before proposing a break-up of the company.

Monopoly maintenance

But the company may have a harder time getting the judges to throw out the government's first, so-called "monopoly maintenance," claim.

The government, legal experts said, made a strong case that Microsoft used its dominance over the PC desktop to try to keep the rival Netscape Navigator browser and other competing products from the marketplace.

Microsoft lawyers will argue that Netscape and other competitors were not "foreclosed" or shut off from consumers and that the company's hardball tactics "had no substantial effect on the market," said Robert H. Lande, a law professor at the University of Baltimore who has studied the case.

Government lawyers, meanwhile, will "hammer home that there was a nine-month trial and Microsoft had full opportunity to present facts," Houck said.

If the judges uphold part or all of Jackson's rulings, Litan said, they will still remand the case back to a different district judge for more remedy hearings.

The appeals judges may even instruct the lower court to rule out the idea of breaking up the company, he said.

Throughout the arguments, Houck and other legal experts said they will be paying particularly close attention to the appeals court's resident expert on antitrust law, Judge Douglas Ginsburg.

Ginsburg served in the Justice Department's antitrust division for four years under President Ronald Reagan and was chief of the division for two of those years.

Ginsburg, like at least three of the other appeals judges, has a reputation as a conservative jurist skeptical of government activism.

"He will be one influential judge--no question about it," Litan said. "I think the justices will look to him for guidance because he had that job."

-- from staff and wire reports  graphic